1. Industry Research
Simplified Interline Settlement
Airline Preparedness Survey – Wave 2

2. Contents
Executive summary ............................................................................ 3
Participants detail ............................................................................. 4
Airline’s priority for SIS compliance .................................................. 5
Understanding of changes required for SIS Compliance .................... 6
Training requirements and dependencies .......................................... 7
Status in terms of readiness for SIS .................................................. 8
Approaches to SIS compliance .......................................................... 9
Estimated time and budget ............................................................... 10
Survey objectives & methodology ..................................................... 11
About IATA’s Simplified Interline Settlement (SIS) ............................ 12
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

3. Executive Summary
SIS Airline Preparedness Survey - Wave 2
The deadline for International Air Transport Association's (IATA) Key findings from Wave 2:
Simplified Interline Settlement (SIS) project is fast approaching.
Come September 2011, airlines globally will move to the
91% consider SIS compliance as high to very
ä
revolutionary new platform that aims to streamline the interline
high priority
settlement process. Starting with the passenger revenue
accounting and miscellaneous (non-transport) billing processes,
ä % respondents are still not clear
Over 50
SIS will also encompass the cargo and UATP processes.
about the required system changes to
become SIS compliant
The SIS Airline Preparedness Survey is a Kale initiative to assist
the airline industry in its transition. Carrying forward from its
ä respondents expressed training need to
64 %
learning in the first edition, Wave 2, is built on insights gathered
understand changes required for SIS
from airline revenue accounting professionals to identify the
compliance
airline industry's readiness for SIS. The Airline Preparedness
Survey - Wave 2 saw a record participation of 82 respondents
ä % of airlines are beyond Initiation
Over 50
from 66 airlines across the globe.
and budget finalization stage of SIS
readiness
The survey shows that majority (82%) of the airlines have
initiated and finalized their course of action and budgets for
ä respondents shown dependency on RA
53 %
becoming SIS compliant. However, there is still a clear lack of
vendor for implementing technology change
understanding towards the changes required in 'Miscellaneous
billing' and 'Cargo' areas. Without proper training and
ä % respondents expect their system
Only 19
assistance for the implementing the required changes, the
to be SIS compliant before Sep 2011
industry is currently behind schedule in their SIS compliance
initiatives.
During the survey and related interactions with the industry we
have found that airlines globally are approaching SIS
compliance in various ways. From developing in-house
solutions, dependence on vendors for changes, to outsourcing
their interline requirements – the options available are
multifold. But it is more important to realize that SIS is an ideal
opportunity for airlines to relook at their systems and undertake
significant business process re-engineering in order to derive
the maximum benefits of this industry change.
The breadth and depth of these survey findings help paint a big
picture view of the IATA's SIS project, more than just a quick
snapshot, the information shared by participants has enabled us
to provide fresh insights to all those associated with the airline
industry today.
Kale Consultants Limited would like to thank all those who
participated in our survey.
SIS Preparedness Survey - SIS Preparedness Survey - SIS Preparedness Survey -
Wave 1 Wave 2 Wave 3
JUNE 2010 JANUARY 2011 JULY 2011 (proposed)
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

4. Participants Detail
The SIS Preparedness Survey - Wave 2 saw active participation from airlines across the globe. A total of 66 airlines ranging
from network carrier to low cost carrier participated in the survey. The online survey was conducted between January and
February 2011. The survey data analysis was done in March 2011.
No. of Airlines from each region Respondents Profile
South Middle East
America, 7 + Africa, 8
North
America, 9
Asia, 22
Europe, 20
Participation : Wave 1 vs. Wave 2
Wave 1 Wave 2
Airline 56 66
Individuals 71 82
.............................................................................................................
Size
Annual PAX Count
Tier 1 Above 15 Million
Tier 2 Between 3 - 15 Million
Tier 3 Below 3 Million
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

5. Airline’s priority for SIS compliance
91%
The Simplified Interline Settlement (SIS) project aims to
standardize, facilitate and expedite interlines billing and
settlement in the airline industry. IATA's SIS initiative is
expected to bring substantial business benefits across both
top-line and bottom-line. However it has varied degrees of
prioritization in terms of importance as well as
consider SIS implementation timelines. There are significant regional
compliance as high differences, 88 % of the respondents from airlines in Middle
East and Africa region consider SIS as very high priority,
to very high priority whereas SIS compliance is high priority for American and
Asian airlines. From the last survey – Wave 1 to present Wave
2 there is no drastic shift observed. However, priority level has
certainly increased.
Priority : Priority:
Wave 1 vs. Wave 2 Regional differences
Low priority High priority Very high priority
* Base: Those respondents answering - unweighted
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

6. Understanding of changes required for SIS Compliance
50%
SIS compliance is arguably the most significant and largest
impact to airline accounting in decades. It is mandated for any
airline that settles interline through either ICH (IATA Clearing
Over
House) or ACH (ATA Airline Clearing House). Most airlines are
aware about changes required in passenger revenue
accounting. However, awareness is limited for changes
Respondents are still
required in miscellaneous billing system to be SIS compliant.
not clear about the
Over
ä 43 % of respondents understand the changes
required system required in passenger revenue accounting
changes to become Only
ä 17% respondents are aware what changes are
required in miscellaneous billing system to be SIS
SIS compliant compliant
Significant
ä changes observed among airlines in
understanding the system change for passenger revenue
accounting; however this understanding is missing
towards Miscellaneous & Cargo.
Understanding System Changes
Wave 1 vs. Wave 2
* Base: Those respondents answering - unweighted
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

7. Training requirements and Dependencies
64%
Airlines across the globe have found different ways to be SIS
compliant. Nevertheless, the basic tasks which need to be
accomplished are the same for all airlines. The results of this
survey give us a representative picture of the status of
training needs among airlines. Training programs need to been
designed in order to meet airline needs.
respondents
Only 5 % of the respondents understand SIS related system
expressed the need changes, whereas other are not sure or to some extent require
for training to training to understand changes in their present system to be
SIS compliant.
understand changes
required for SIS
compliance
Dependance for Training/ Hand-holding
Airline respondents who have vendor
provided RA system depend on vendor for
hand holding/training needs. Irrespective of
the approach taken by the airline to become
SIS compliant training need observed across IATA Both RA Vendor
airline. There are very few airlines have opted
to purchase off the shelf module or replace the 36% 26% 38%
current RA system
* Base: Those respondents answering - unweighted
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

8. Status In term of readiness for SIS
50%
At present, Airlines across the globe do not have infrastructure
(System) to support the industry change.
Over SIS compliance is steadily gaining momentum in the airline
industry since airlines are aware of the overall impact and the
return on investment (ROI) which can be obtained by adopting
such technology.
of airlines are
beyond Initiation Significant regional changes observed are:
and budget Europe
ä and Middle East and Africa region based airlines
are ahead of others in readiness
finalization stage of
SIS readiness Majority
ä of airlines in South America & Asia are lagging
behind in term of readiness
Keeping
ä the go-live date stated by IATA, airlines are found
to be at nascent stage of their preparation level.
Readiness Status
* Base: Those respondents answering - unweighted
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

9. Approaches to SIS Compliant
53%
In rapid changing air transport environment, technology has
emerged as a key component in solving complex strategic
issues. Airlines are becoming increasingly dependent on
technology to improve their performance and have found
different ways of implementing technology change to become
SIS compliant.
respondents shown
Significant regional changes observed are:
dependency on RA
vendor for Majority
ä (44%) respondents from North American airlines
take lead in developing in-house solution to become SIS
implementing compliant
technology change Airlines
ä from Middle East and Africa region completely
depend on RA system vendor to provide solution.
ä respondents
Few from South America region plan to
outsource their interline billing to a 3rd party vendor
European
ä airline look forward to replace their current RA
system with SIS compliant RA system
Approach to become SIS Compliant
* Base: Those respondents answering - unweighted
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

10. Estimated time and budget
19%
IATA has set a fixed timeline for all members for their
passenger revenue accounting and miscellaneous billing
system to go-live as Sept 2011, Timely and successful
Only
implementation of IATA's SIS project holds the key toward
future success of this ambitious mission.
respondents expect ä3
Only % of the airline respondents expect their system to
their system to be be SIS compliant within 3 month.
SIS compliant before ä Wave
From 1 to Wave 2, there has been progress in
estimated time taken for compliance
Sep 2011
However,
ä a very small percentage of airlines are confident
on getting compliant by September 2011
Airlines have to follow stipulated methods for settling their
dues, if some airlines have not upgraded their operating
system, it will result into dilemma, Wherein SIS compliant
airline will be using Integrated Settlement (IS) unit and Non
SIS compliant airlines have to go via traditional way which
will intensely affect the settlement process.
Majority (60%) respondents mentioned that, they are
unaware about the budget to be considered. This is primarily
Estimated Time
because of the ambiguity on requirement and step wise
process. Almost 1/4th of them kept the budget on lower side
i.e. less than $50,000.
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

11. Survey objectives & methodology
The survey objectives are to monitor the airlines preparedness
towards IATA’s Simplified Interline Settlement (SIS) Project
which includes:
ä priority for SIS compliance
Airline’s
Understanding of changes required for SIS compliance
ä
ä requirements and dependencies
Training
ä in terms of readiness for SIS
Status
Approaches to SIS compliance
ä
Estimated time and budget
ä
A total of 82 responses from 66 airlines
The survey was first launched in 2010 and comparisons are received, providing an even and
made where appropriate with previous surveys, although the
representative share of the world’s top
sample may vary between years. Questionnaires were sent to
senior revenue accounting heads and other high-level airlines
executives during (1st Quarter) January 2011.
Most of the questions used simple check box, multiple choice,
or ranking format, but there were several open ended
questions as well. The extensive nature of the question set
was intended to maximize depth of information rather than
breadth of responses.
Simplified Interline Settlement
Airline Preparedness Survey - Wave 2
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

12. About IATA’s Simplified Interline Settlement (SIS)
The Simplified Interline Settlement (SIS) project The Integrated Settlement solution will encompass
aims to simplify interline billing, and remove paper Passenger, Cargo, Miscellaneous and UATP interline
from the entire settlement process, delivering billings and ICH, ACH as well as bilateral
tangible financial and process improvement benefits settlements.
to the industry.
IATA states the vision for SIS project as follows:
ä are electronic and not backed by paper
? Invoices
äpassenger billings do not require paper invoices or
? Prime
coupon listings
? IDEC formats are maintained with increased record types
ä
? Passenger rejects, including any attachments, are submitted
ä
electronically without paper
äand Mail billings are electronic and paperless
? Cargo
? Miscellaneous billings (including any supporting information)
ä
are electronic, whether as data or with attachments
Settlement action directly from Electronic Ticketing (ET)
ä
systems is enabled - Auto-billing
Source: IATA Presentation
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2

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Mar 2011